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In July 2018 Safeguard duty was imposed on cells and modules to safeguard solar domestic manufacturers who were not competent enough to match economies of scale production and match the price of solar components imported from China and Malaysia. A duty of 25% for the first year, 20% for the next six months, and 15% for the last six months ending in July 2020 was  imposed on imports. 90% of solar imports were from china and to support domestic industry in these 2 years, government also came with solar tender that had specific domestic content requirements.

This safeguard duty is about to end in July 2020, but it did not had any constructive upshot, hardly any local manufacturing facility has been set up. It has also not met the objective of the government in driving creation of jobs and more economic growth. On the other side those with built in capacities are running with a limited manufacturing capacities, as utility scale still continue to utilize and rely on  imported modules. Major consumers of domestic module manufacturing are rooftop consumers, they rely on domestic suppliers due to lesser logistic times.

India has around 2 GW of solar manufacturing capacity and in two years nothing major has been added. Manufacturers quote that the duration for which the duty was announced was too short for them to make such a major financial commitment based on just this concession. If the custom duty announced by Finance Minister gets imposed then it will have repercussions of high cost as those with manufacturing units in SEZ will have to pay higher custom duties, also domestic supplies wil become inflated. Commerce ministry is still investigating on extension of safeguard duty for future periods. Government must act fast to reduce dependence on imports from China and de-risk the supply chain.